Takata Corp. said it will probably report a second consecutive annual loss, pointing to the growing financial toll its airbag recalls were having even before the U.S. ordered the supplier to double the number of devices that will be replaced.
The company will probably have a net loss of 13 billion yen ($121 million) for the year ended March 31, compared with an earlier forecast for a 5 billion yen profit, Takata said in a preliminary results filing to the Tokyo stock exchange. The company posted a net loss of 29.6 billion yen a year earlier.
Takata said last week it would book a combined 20.1 billion yen in charges, 16.6 billion of which was decided after reviewing airbag recall costs. That was two days before the National Highway Traffic Safety Administration added 35 million to 40 million more inflators to be retrieved in the U.S., potentially bringing the total number of parts to be replaced there to 69 million.
With the recalls putting increasing strain on its balance sheet, the Japanese supplier has begun to seek financial sponsors that would replenish its capital and allow it to emerge as a new company, a person familiar with the matter said last month. The recalls may increase to 118.5 million units worldwide, as Japan and automakers in other markets probably will follow the U.S. in calling back all airbags that lack a moisture-absorbing desiccant, a Jefferies Group estimated in a report last week.
Moisture seeping into Takata’s airbag inflators are a factor contributing to misfires that spray bits of metal and plastic into vehicle passenger compartments. The rupture incidents have killed at least 13 motorists in the U.S. and Malaysia.
Takata’s shares have declined 58 percent this year. The company is scheduled to announce its results on May 11.